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Dissent in Monetary Policy Decisions: Effects, Channels and Implications

Author

Listed:
  • Christophe Blot

    (Sciences Po, OFCE)

  • Paul Hubert

    (Banque de France, OFCE)

  • Fabien Labondance

    (Université Marie et Louis Pasteur, CRESE (UR3190), F-25000 Besançon, France)

Abstract

We investigate whether dissent in monetary policy committees affects asset prices. We exploit a feature of the ECB communication for identification: the revelation of dissent during press conferences is separated from policy decision announcements. Follow- ing a narrative approach, we compute a novel granular index of ECB dissent for each instrument and identify the dissent direction. Using tick data, we isolate asset price changes exactly when dissent is revealed. Dissent has a strong negative effect on stock prices, that operates specifically around status quo decisions. Dissent is a key driver of stock prices on these days, explaining one-third of their variation.

Suggested Citation

  • Christophe Blot & Paul Hubert & Fabien Labondance, 2025. "Dissent in Monetary Policy Decisions: Effects, Channels and Implications," Working Papers 2025-07, CRESE.
    • Handle: RePEc:crb:wpaper:2025-07
    as

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    File URL: https://crese.univ-fcomte.fr/wp-content/uploads/2025/07/WP-2025-07.pdf
    File Function: First version, 2025
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    More about this item

    Keywords

    Asset prices; Disagreement; Monetary Policy Committee; Bad news; European Central Bank;
    All these keywords.

    JEL classification:

    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • D70 - Microeconomics - - Analysis of Collective Decision-Making - - - General

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